The World Bank has sharply lowered its economic outlook for Russia for 2015 and 2016 to reflect a further decline and increased volatility in global oil prices, the bank’s latest report on global economic prospects said.

“…sustained low oil prices will weaken activity in exporting countries. For example, the Russian economy is projected to contract by 2.9 percent in 2015, getting barely back into positive territory in 2016 with growth expected at 0.1 percent,” the report, published on Tuesday, said.

The previous World Bank report projected Russia’s real GDP to contract by 0.7 percent in 2015, before increasing by 0.3 percent in 2016.

In December 2014, the Russian Economic Development Ministry adjusted its forecast of the country’s economic growth in 2015 to the decline of 0.8 percent under a baseline scenario that assumes an average oil price of $80 per barrel.

Russia’s economy is currently suffering from the sharp decline in global oil prices, given that the country’s budget is largely dependent on energy exports. The fall in prices was triggered by the decision by the Organization of the Petroleum Exporting Countries’ (OPEC) not to cut oil production.

The Russian ruble has recently plummeted to historic lows. The strong dollar and weak ruble are also said to be the result of the Western sanctions imposed against Russia over its alleged involvement in the Ukrainian crisis.

In December, head of the Russian Central Bank Elvira Nabiullina said she expected the 2014 inflation rate in Russia to reach 10 percent and stay at that level in the first quarter of 2015.

Meanwhile a forecast published by the European Commission in November suggested that it may take until 2016 for the inflation in Russia to fall to 6 percent.

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